Prince Max von Liechtenstein, CEO and chairman of LGT, criticizes a focus on short-term results in business. He argues that prioritizing annual returns over long-term strategy is misguided.
The constant availability of real-time data in the digital age fuels short-term thinking in business. This can be seen in everything from stock prices fluctuating by the second to a focus on quarterly earnings. However, Prince Max von Liechtenstein, CEO and chairman of LGT, argues that this mentality is ultimately impractical.
At a recent investor conference in Hong Kong, Prince Max von Liechtenstein, downplayed the significance of annual returns. He argued that focusing on long-term performance, over five or ten years, is a wiser strategy. He explained that short-term factors can create misleading fluctuations in yearly results. Our natural tendency to focus on the short-term, he added, is a major root cause of problems.
Private Market Giant
Prince Max von Liechtenstein’s criticism of annual returns stems from his larger view. He believes that private markets, with their focus on longer-term value creation, offer a superior investment approach compared to the public markets’ emphasis on short-term results.
At a Milken Institute event, the Prince argued that private equity investing outperforms other asset classes. He believes this isn’t because the companies themselves are inherently better, but rather due to a better investment approach. He mentioned deeper due diligence and closer collaboration with companies as examples of this superior approach.
Under-estimation
Prince Max von Liechtenstein’s strong belief in private markets likely stems from his own experience. He began his career in this sector as an investment analyst in New York way back in 1993. While the private market landscape has grown considerably since then, he sees even more room for future growth in this area.
Prince Max von Liechtenstein acknowledges the increasing popularity of private markets, with more money flowing into them. However, he believes they remain underutilized, especially by individual investors who might dislike the limited ability to quickly access their invested funds (low liquidity). Despite this, he maintains his optimism about private markets potentially delivering slightly better returns compared to other options.
